Obama Wins a Second Term

President Barack Obama walks on stage with first lady Michelle Obama and daughters Sasha and Malia to deliver his victory speech on election night at McCormick Place in Chicago.
Getty Images

By

Peter Nicholas,

Carol E. Lee and

John D. McKinnon

Updated Nov. 8, 2012 12:01 a.m. ET

President
Barack Obama
narrowly won re-election, overcoming public doubts about his performance on the economy—doubts that challenger
Mitt Romney
appeared well-positioned to exploit.

For
Mr. Obama
,
the victory sets up a test of whether he can forge a productive second term in a divided political system.

A review of how President Obama won re-election, including where the balance of power sits in Washington. Photo: Reuters.

The U.S. Presidential election was watched closely around the world, perhaps no more so than in Europe. WSJ London Bureau Chief Bruce Orwall joins the News Hub with European-focused foreign policy questions facing Barack Obama. Photo: Getty Images.

WSJ Economics Reporter Brian Blackstone joins the News Hub from Germany to discuss the impact of the Presidential election on European financial issues. Photo: Getty Images.

See More Video on #WorldStream

For Republicans, it raises uncomfortable questions: What went wrong, and how did Democrats manage to blunt Mr. Romney's seemingly big advantage on what was easily the top issue for voters in the 2012 race?

Early analysis based on polls and other research by Democrats close to the Obama re-election effort suggests that Mr. Obama found multiple ways to chip away at the public's confidence in Mr. Romney, as well as his conservative policy prescriptions. That multifront effort succeeded in raising enough doubt about Mr. Romney—and sufficiently reinforcing Mr. Obama's own message—to allow the president to gain re-election.

Some top Republicans agreed they need to rethink how they present their economic message.

"We need to do a better job of making our economic case" in coming elections, GOP strategist Karl Rove said on Fox News on Wednesday morning. Mr. Rove said one reason Democrats succeeded was that they turned the presidential election into a tactical fight largely defined by negative attacks.

Mr. Rove noted that while Mr. Romney appeared to score well with voters in a number of categories, including his leadership and vision, Mr. Obama by the end held a lopsided advantage on the question of which candidate cares about people like them. Democrats succeeded in defining Mr. Romney as "a rich guy who didn't care about them," Mr. Rove said.

Mr. Obama also was aided by a well-executed turnout effort, one that was all the more successful because of demographic shifts that are placing more electoral power in the hands of minority voters, who tended to support Mr. Obama by large margins.

His victory makes Mr. Obama the first president since Franklin D. Roosevelt in 1940 to succeed with a higher unemployment rate on Election Day than on his inauguration day four years earlier. U.S. unemployment now stands at 7.9%, compared with 7.8% when Mr. Obama took office.

A poll completed this week by Democratic pollster Geoff Garin—and funded by an independent group supporting Mr. Obama—suggested that the Obama campaign succeeded in part by persuading voters that Mr. Romney's economic policies would be bad for people like themselves. "Only 38% of voters say that if Mitt Romney is elected president his economic policies will be good for people like them," the analysis says. "By comparison, 44% say President Obama's policies will be good for people like them."

While a large majority of voters said they were dissatisfied with the economy, relatively few blamed Mr. Obama, pointing their fingers instead at Wall Street and the administration of former President George W. Bush. A narrow majority of voters said they believed the country was making progress economically, and those voters tended to side with Mr. Obama.

The Obama campaign also succeeded in undermining voter perceptions of Mr. Romney's tenure at Bain Capital, the private-equity firm he founded. "In the final round of swing state polling…voters agreed by 17 points that 'as a businessman, (Romney's) priority was making millions for himself and his investors, regardless of the impact on jobs and the employees,' " according to the Garin analysis.

After winning a second term, President Barack Obama ends his victory speech with his vision for the country during his speech. Photo: Getty Images.

More

In his victory speech, Mr. Obama said he now looks forward to "sitting down with Gov. Romney to talk about where we can work together to move this country forward."

John Mack, the former Morgan Stanley chief executive, suggested on Wednesday that after all the campaign-season criticism of business, Mr. Obama should enlist Mr. Romney's help in mending fences, particularly given the economy's ongoing problems.

"I would love to see the president reach out and ask Mitt Romney to get involved in some way to work with the business community," Mr. Mack said on Bloomberg TV. "If we could make some moves like that where we could work together…I think it's a huge positive."

In retaining the presidency, Mr. Obama, 51 years old, defeated the 65-year-old former Massachusetts governor, who had been seeking the office for six years.

"We may have battled fiercely, but it's only because we love this country deeply and we care so strongly about its future," the president said in a victory speech that came after 1:30 a.m. Eastern time. He said he would meet with Mr. Romney in the coming weeks to discuss various issues confronting the country.

"I so wish that I had been able to fulfill your hopes to lead the country in a different direction, but the nation chose another leader," Mr. Romney said in his concession speech.

Senate Republican Leader Mitch McConnell (R., Ky.), who has been one of the president's primary adversaries in Congress, extended Mr. Obama a hand—with an admonition—in a statement issued early Wednesday.

"The American people did two things: they gave President Obama a second chance to fix the problems that even he admits he failed to solve during his first four years in office, and they preserved Republican control of the House of Representatives," he said.

He made clear that Republicans are expecting the next four years to be different from the past four years. "To the extent he wants to move to the political center…we'll be there to meet him half way. That begins by proposing a way for both parties to work together in avoiding the 'fiscal cliff' without harming a weak and fragile economy, and when that is behind us work with us to reform the tax code and our broken entitlement system," he said.

ENLARGE

President Obama gathers with his wife, Michelle, left, and daughters Sasha and Malia, right, during his election night victory rally in Chicago.
Reuters

Propelling Mr. Obama to victory was the unique coalition he forged four years ago, one that reflects the changing nature of the U.S. electorate—notably, the diminished influence of white Americans and the rising clout of Latino voters.

Greeting Mr. Obama will be a divided Congress. Democrats retained their Senate majority, while Republicans looked set to keep control of the House of Representatives. After the election, Washington remained aligned exactly as it was Tuesday morning, despite $6 billion in spending and 1.2 million political ads in the presidential race alone.

Americans handed Mr. Obama the job of navigating conflicting impulses in both Washington and the nation, a partisan divide the president has previously struggled to master.

Despite Mr. Romney's focus on the economy, pitching himself as a onetime businessman capable of fixing what ails the U.S., he couldn't overcome missteps and attacks from Democrats over his work as a private-equity executive.

U.S. President Barack Obama smiles as he speaks during a campaign rally in Fairfax, Virginia October 5, 2012.
Reuters

At stake were two starkly different visions of the role of government and the recipe for economic revival. Mr. Romney called for reducing taxes and scaling back regulations, which he said would trigger economic growth.

Mr. Obama laid out a model of public investment in alternative energy and education, along with tax increases on wealthier families to help cut deficits. He has also voiced plans to pursue a revamp of U.S. immigration laws.

The president's re-election campaign was light on details of his second-term agenda, in contrast to the ambitious list he brought to the office in 2008.

Mr. Obama sealed his victory with wins in swing states including Ohio, Colorado and Virginia. He was running neck and neck in Florida.

The contest showed how dramatically the U.S. has changed in recent years. According to exit polls, Mr. Romney won 60% of the white vote. Mr. Obama won 38%, five points fewer than his 2008 showing. Not since Walter Mondale, who was swept aside by Ronald Reagan in the 1984 presidential race, has a Democrat recorded a smaller share of the white vote.

Mr. Obama will have little time to savor his victory. Looming almost immediately is the so-called fiscal cliff, a series of tax increase and spending cuts that come into force Jan. 1 and that could unravel the economy's fragile gains unless the president and congressional leaders engineer a compromise. The U.S. will also hit its borrowing limit in coming months, raising the prospect of a battle like the one last year that led to a downgrade of the U.S. debt rating.

Mr. Obama hopes to broker a far-reaching agreement, the kind of "grand bargain" that eluded him last year, which would include raising taxes on wealthier Americans. Republicans have said they would oppose any tax increase. The White House is already working to convene a meeting between the president and congressional leaders.

A key player will be Rep. Paul Ryan of Wisconsin, Mr. Romney's running mate and a student of fiscal matters, who retained his House seat.

Mr. Obama notched a victory in a political climate that seemed ripe for his defeat. Polls showed more than half the population believed the U.S. was on the wrong track and that the government performed too many functions best done by the private sector—attitudes that would seem to benefit Republicans.

Mr. Obama was favored to win for most of the campaign, but the race narrowed in the final month after he turned in a lackluster performance in the first of three presidential debates.

Mr. Romney closed the gap in the polls, raising the possibility that the nation's first African-American president might be voted from office at the end of a single term.

Mr. Obama prevailed through an aggressive and well-funded campaign. He championed middle-class interests while depicting Mr. Romney as an uncaring businessman whose economic policies would favor the wealthiest Americans.

The campaign's tone was coarse. Mr. Obama largely jettisoned the hopeful message of his 2008 campaign, convinced that to win he needed to paint Mr. Romney as an unpalatable alternative.

Mr. Obama's rise to power might have been dismissed as a fluke had he not secured a second term. His biography is nothing like that of recent predecessors. Mr. Obama was raised by a single mother and his grandparents. His father was from Kenya and his mother's family from Kansas. Mr. Obama spent most of his childhood in Hawaii, where he attended a prestigious private school. After graduating from Columbia University, he attended Harvard Law School, becoming the first African-American editor of the Harvard Law Review. He eventually moved to Chicago, where he became a community organizer and met his wife, first lady Michelle Obama.

His political resumé is short. He served in the Illinois state Senate until 2004, when he captivated the nation with a keynote address at the Democratic National Convention. He was elected to the U.S. Senate that same year and hadn't served a full term before he won the White House in 2008.

His first term included passage of the health-care law, the financial-regulation bill and a series of interventions to save the banking system from the worst downturn since the Great Depression.

After the midterm elections in 2010, Republicans took charge of the House and Mr. Obama was forced to curb his ambitions.

The president has predicted that he would have better results in a second term. David Plouffe, a senior White House adviser, said any ill will from the election would quickly vanish.

Mr. Obama has said he would push several pieces of unfinished business left over the first term. He wants to pass an immigration overhaul that would provide a path to legal status for the 11 million people living in the U.S. illegally.

Republicans might conclude it is in their interest to cooperate. In Tuesday's elections, the GOP got a lesson in the dangers of alienating Latinos. Many Republicans strategists have said the party must soften its stance on illegal immigration. Latinos now account for 16% of the population, and that figure is expected to jump to 22% by 2030.

With Hurricane Sandy ravaging the East Coast, Mr. Obama had a chance to show compassion to storm victims and deploy government resources to neighborhoods left in ruins. No less a critic than New Jersey Gov. Chris Christie, a Republican who gave the keynote speech at Mr. Romney's nominating convention, went out of his way to praise Mr. Obama's performance. About two-thirds of the public approved of the president's handling of Hurricane Sandy, a Wall Street Journal-NBC News poll showed.

Worse for Mr. Romney, the storm froze the race at a moment when he had been gaining momentum and cutting into Mr. Obama's lead. Sandy diverted the nation's attention for days, forcing Mr. Romney to cancel some events and to juggle attacks on Obama with expressions of sympathy for storm victims.

Still, Mr. Obama's re-election would have seemed unlikely in the nadir of his presidency, the fall of 2010, when voters in the midterm election gave Republicans control of the House. Mr. Obama termed that election, "a shellacking." White House advisers turned their attention to his political revival, knowing he was in a tough spot.

Unemployment hovered near 10%, and aides worried that independent voters had abandoned the president. Internal focus groups showed that voters didn't give credit to Mr. Obama for the stimulus program, even though many economists concluded that the measures staved off an even more serious downturn.

Aides settled on a strategy that emphasized steady improvement in the jobless rate while positioning Mr. Obama as a champion of the middle class.

Rather than save their money for the post-Labor Day race to November, the Obama campaign spent millions of dollars on TV ads attacking Mr. Romney for his record at Bain Capital. They painted him as a predatory capitalist who bought companies and laid people off in search of a quick profit.

Mr. Obama burned through a good chunk of his campaign cash, making some Democrats uneasy. But he made Mr. Romney unpopular among some voters.

In the end, Mr. Obama suffered no shortage of funds. In September alone, he took in $181 million in campaign donations. Altogether, the president and allied groups will have raised nearly $1 billion over the course of the campaign.

—Patrick O'Connor and Colleen McCain Nelson contributed to this article.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.